Canadian inflation edges up in June on food, shelter costs

Fri Jul 17, 2015 9:24am EDT
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By Leah Schnurr

OTTAWA (Reuters) - Canada's annual inflation rate edged up in June, but cheaper energy prices helped keep it at the lower end of the central bank's target range, data from Statistics Canada showed on Friday.

Annual inflation was 1 percent last month, up from 0.9 percent in May and in line with analysts' forecasts. The increase was led by higher prices for food and shelter.

But core inflation, which strips out volatile items and is closely watched by the Bank of Canada, was less subdued at 2.3 percent, up from 2.2 percent in May.

The Bank of Canada, which cut rates on Wednesday to combat a struggling economy, sees the effects of a weaker currency and some sector-specific factors as temporarily boosting the core rate.

The bank has estimated that the underlying trend in inflation is 1.5 percent to 1.7 percent.

"For the Bank of Canada, this is still a secondary concern for them. They have definitely made up their own perspective in terms of where they see underlying inflation," said David Tulk, chief Canada macro strategist at TD Securities.

The bank has a target range of 1 percent to 3 percent for inflation.

The report helped send the Canadian dollar CAD=D4 to a six-year low against the greenback. Investors were also taking in inflation data from south of the border. [CAD/]   Continued...

Shoppers stroll through the 5.3 million square foot (492,000 square metre) West Edmonton Mall in Edmonton, Alberta February 26, 2015.  REUTERS/Dan Riedlhuber